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SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
Amendment to
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter period ended June 30, 1996
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or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-10150
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ANGELES PARTICIPATING MORTGAGE TRUST
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(Exact Name of Registrant as Specified in Its Charter)
California 95-6881527
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(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
340 North Westlake Boulevard, Suite 230, Westlake Village, California 91362
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (805) 449-1335
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No Change
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Former Name, Former Address and Former Fiscal Year If Changed Since Last Report
Securities registered pursuant to
Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on
Which Registered
Class A Shares American Stock Exchange
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Securities Registered Pursuant to Section 12(g) of the Act:
NONE
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(Title of class)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
[X] Yes [ ] No
Total Pages 11
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ANGELES PARTICIPATING MORTGAGE TRUST
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
Part I. Financial Information
Item I. Balance Sheets - June 30, 1996 and December 31, 1995 3
Statements of Operations - For the three and six
months ended June 30, 1996 and 1995 4
Statements of Cash Flows - For the six months
ended June 30, 1996 and 1995 5
Notes to the Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 10
</TABLE>
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ANGELES PARTICIPATING MORTGAGE TRUST
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
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(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 814,000 $ 863,000
Investments 987,000 1,196,000
Other receivables 6,000 10,000
Other assets 125,000 125,000
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Total assets $ 1,932,000 $ 2,194,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $ 33,000 $ 39,000
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Total liabilities 33,000 39,000
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Shareholders' equity:
Class A Shares (2,550,000 shares
issued and outstanding, $1.00 par
value, unlimited shares authorized) 2,550,000 2,550,000
Class B Shares (1,275,000 shares
issued and outstanding, $.01 par
value, unlimited shares authorized) 13,000 13,000
Additional paid in capital 42,329,000 42,329,000
Accumulated undistributed net realized
gain from sale of mortgages 2,545,000 2,545,000
Accumulated distributions in excess
of cumulative net income other than
gain from sale of mortgages (45,538,000) (45,282,000)
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Total shareholders'
equity $ 1,899,000 $ 2,155,000
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Total liabilities and
shareholders' equity $ 1,932,000 $ 2,194,000
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
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ANGELES PARTICIPATING MORTGAGE TRUST
STATEMENTS OF OPERATIONS - UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
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1996 1995 1996 1995
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<S> <C> <C> <C> <C>
REVENUE:
Interest income from investments $ 21,000 $ 36,000 $ 29,000 $ 69,000
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Total revenue 21,000 36,000 29,000 69,000
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COSTS AND EXPENSES:
General and administrative
expenses 80,000 80,000 285,000 158,000
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Total costs and
expenses 80,000 80,000 285,000 158,000
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NET LOSS $(59,000) $(44,000) $(256,000) $(89,000)
======== ======== ========= =======
NET LOSS PER CLASS A SHAREHOLDERS $(58,000) $(44,000) $(253,000) $(88,000)
======== ======== ========= ========
NET LOSS PER CLASS A SHARE $ (0.02) $ (0.02) $ (0.10) $ (0.03)
======== ======== ========= ========
CASH DISTRIBUTIONS PER CLASS A SHARE $ 0.00 $ 0.00 $ 0.00 $ 0.00
======== ======== ========= ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
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ANGELES PARTICIPATING MORTGAGE TRUST
STATEMENTS OF CASH FLOWS - UNAUDITED
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
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1996 1995
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<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (256,000) $ (89,000)
Adjustments to reconcile net income (loss)
to cash flows from operating activities:
Decrease (increase) in other receivables 4,000 (21,000)
Increase in other assets - (15,000)
Decrease in accounts payable and
accrued expenses (6,000) (53,000)
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Cash flows from operating activities (258,000) (178,000)
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Cash flows from investing activities:
Sale of investment securities 1,478,000 -
Principal collections of investment
securities 1,197,000 130,000
Investment in investment securities (2,466,000) (165,000)
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Cash flows from investing activities 209,000 (35,000)
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Decrease in cash and cash equivalents (49,000) (213,000)
Cash at beginning of period 863,000 872,000
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Cash at end of period $ 814,000 $ 659,000
========== =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
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PART I. FINANCIAL INFORMATION
ANGELES PARTICIPATING MORTGAGE TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - In the opinion of management, the accompanying financial statements
contain all of the adjustments necessary to present fairly the financial
position of Angeles Participating Mortgage Trust (the "Trust" or "APART") at
June 30, 1996 and the results of operations and its cash flows for the three and
six months ended June 30, 1996 and 1995, in conformity with generally accepted
accounting principles applied on a consistent basis. All adjustments included
are of a normal and recurring nature. Certain prior years amounts have been
reclassified to conform to current year classifications.
NOTE 2 - The net income per Class A Share was based on 2,550,000 weighted
average shares outstanding during the three and six months ended June 30, 1996
and 1995, after deduction of the 1% Class B Share interest.
NOTE 3 - Cash and cash equivalents include cash held in bank or invested in
money market funds with maturity terms of less than 90 days. Of the cash and
cash equivalents balance at June 30, 1996 and December 31, 1995, all of the cash
balance of $814,000 and $863,000, respectively, is held by the APART Contingent
Claim Trust ("Contingent Claim Trust") for the benefit of APART. Such
Contingent Claim Trust was established to provide for any contingent claims
arising from the operations of APART or any liability under APART's
indemnification agreements for its Trustees. The Contingent Claim Trust was
terminated on August 12, 1996 based on the determination by its trustee that no
contingent claims exist.
The sole beneficiary of the Contingent Claim Trust was the Trust and the
operations of the Contingent Claim Trust were under the control of the chief
executive officer of the Trust. The Contingent Claim Trust has been accounted
for by the Trust on the consolidated method of accounting, since its inception
in 1993, as it was deemed more appropriate for including the assets and
operations of the Contingent Claim Trust with those of the Trust. As the
Contingent Claim Trust is a single asset trust, the differences had it not been
accounted for under the consolidated method are minor. The net current assets,
the net current liabilities and shareholders equity would have been identical.
The only difference within the balance sheet is the caption of the asset which
in consolidation is shown as an investment in investment securities versus a
receivable from the Contingent Claim Trust. The only difference in the statement
of operations is the caption relating to the interest earned on the investment
in securities versus reporting such amount as other icome.
NOTE 4 - As of June 30, 1996, the Contingent Claim Trust holds an investment in
U. S. Treasury Bills, due August 29, 1996. During the quarter ended June 30,
1996, a U. S. Treasury Bill matured, which had been acquired in the prior 1996
quarter. The Trust classifies its investment in securities as "held to
maturity."
As of December 31, 1995 the Contingent Claim Trust held two security
investments in the Federal Home Loan Mortgage Corporation (the "FHLMC"), having
an 8.5% coupon rate and maturing on January 1, 1996 and June 1, 1996. During
the quarter ended March 31, 1996, one of the FHLMC investments matured and the
Trust acquired a new investment in the FHLMC with a maturity date of
6
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December 1997 and a coupon rate of 7.0%. In February 1996, the Contingent Claim
Trust sold the two FHLMC investments which had maturity dates of June 1, 1996
and December 1997 and acquired an investment in U. S. Treasury Bills which
matures August 29, 1996. The Trust's intent was to hold the FHLMC investments to
maturity. However, legal counsel determined that such investment may
inadvertently bring the Trust within the scope of the Investment Company Act of
1940 and based on the implementation of the Trust's new business plan, such
investments were no longer required. The Trust recognized a loss upon the sale
of the two security investments of approximately $19,000. The Trust intends to
hold its current treasury investment until its maturity of August 29, 1996.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Trust's primary source of cash is from interest earned on
investments and cash and cash equivalents. Of the Trust's approximately $1.8
million and $2.1 million of investments and cash as of June 30, 1996 and
December 31, 1995, respectively, all of it is held by the APART Contingent Claim
Trust ("Contingent Claim Trust") for the benefit of APART. Such Contingent
Claim Trust was established to provide for any contingent claims arising from
the operations of APART or any liability under APART's indemnification
agreements for its Trustees.
The term of the Contingent Claim Trust expires automatically on
December 31, 1996 but may be terminated by the sole trustee based on a
determination that no contingent claims exist. Effective August 12, 1996 the
sole trustee of the Contingent Claim Trust, Ronald J. Consiglio, determined that
there were no pending or threatened claims existing and terminated the
Contingent Claim Trust thereby returning all assets of the Contingent Claim
Trust of approximately $1.8 million to the Trust on August 12, 1996.
The Trust distributed the majority of its assets, $36,975,000 to Class
A shareholders of record on November 18, 1993 payable December 3, 1993.
Remaining funds, approximately $2.5 million, were retained by the Trust to
provide for potential liabilities or claims, minimal operating costs and the
possibility of obtaining further value for shareholders from potential strategic
alternatives with third parties who might wish to acquire an interest in the
remaining Trust. The amount and timing of any future cash dividends, if any, is
impossible to predict at this time.
On March 15, 1994, the Trust announced that it had entered into an
agreement with a SAHI affiliate, SAHI Partners, a Delaware general partnership,
for the sale of a Warrant for the right to purchase five million shares of the
Trust's Class A Shares at a price of $1 per share and 2,550,000 shares of the
Class B Shares at a price of $0.01 per share. SAHI Partners purchased the
Warrant for $101,000, which amount will be applied against the purchase price
for the first Class A and Class B Shares purchased pursuant to the Warrant. The
Warrant will not be exercisable unless and until the issuance of the Class A and
Class B Shares issuable upon the exercise thereof has been approved by holders
of a majority of the Class A Shares and Class B Shares voting together as a
single class. Upon exercise of the entire Warrant for five million shares, SAHI
would own 69% of the outstanding Class A Shares and, with the voting interest of
the Class B Shares, would control 80% of the voting interest of the Trust. If
these warrants are exercised in their entirety, the Trust would increase its
capital by $5,025,000, and funds from such capitalization would be utilized to
acquire additional investments for the Trust based upon a defined business plan
to be approved by holders of a majority of the Class A and Class B Shares.
Based upon the Trust's cash and cash equivalent balance at June 30,
1996, management believes it has sufficient cash to operate as a going concern
through the remainder of the 1996 fiscal year.
The Trust is currently in the process of preparing a proxy to be filed
with the Securities and Exchange Commission, which would provide the Trust along
with SAHI the ability to acquire positions in a diversified portfolio of real
estate related assets.
8
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RESULTS OF OPERATIONS
During the three and six months ended June 30, 1996, total revenue
decreased to $21,000 and $29,000 or 42% and 58%, respectively, as compared to
total revenue for the comparable periods in 1995. This decrease is the result
of the Trust selling its security investments in the Federal Home Loan Mortgage
Corporation.
While costs and expenses for the three months ended June 30, 1996
approximated the same amount in the same period ending 1995, such total costs
and expenses increased for the six months ended June 30, 1996 when compared to
the six months ended June 30, 1995, due to increased legal costs associated with
the preparation of a proxy for an annual shareholders meeting.
9
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
None.
B. REPORTS ON FORM 8-K
None
Note: All items required under Part II of Form 10-Q which are applicable
have been reported herein.
10
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Trust has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ANGELES PARTICIPATING MORTGAGE TRUST
By /s/Ronald J. Consiglio
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Ronald J. Consiglio
President and Chief
Executive Officer
Date: August 28, 1996
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